All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

The invalidity of any resolution that does not comply with a mandatory rule, or the statutory provisions for SAS, may be requested by any interested party. The most contentious resolutions often concern capital increases, amendments to the articles of association, the exclusion of a partner, or the appointment and/or report of a statutory auditor.

1) Capital increase

An extraordinary general mee …

Strategic deliberations

The invalidity of any resolution that does not comply with a mandatory rule, or the statutory provisions for SAS, may be requested by any interested party. The most contentious resolutions often concern capital increases, amendments to the articles of association, the exclusion of a partner, or the appointment and/or report of a statutory auditor.

An extraordinary general meeting must be annulled when, through a capital increase decided by issuing shares at their nominal value, rather than by issuing a smaller number of shares with preferential subscription rights, the majority shareholders have deliberately caused a breach of equality to the detriment of the minority shareholder . Similarly, resolutions deciding on a capital reduction followed by an increase must be annulled, in the absence of real difficulties for the company, when their sole objective is to fraudulently exclude a shareholder and not to preserve a corporate interest . An extraordinary general meeting must also be annulled when the capital increase decided, by creating new shares reserved solely for the majority shareholder, has been fully paid by offsetting with a current account claim held by the latter, so that it has created no cash flow to meet the financing needs invoked . The same applies to the extraordinary general meeting concerning the principle and terms of a capital increase, when it is organized in the absence of a founding shareholder in order to dispossess them, with their participation dropping from 23% of the capital to 0.49% following the operation .

2) Amendment of the articles of association

Pursuant to Article L. 235-1 of the Commercial Code, the invalidity of an act amending the articles of association can only result from an express provision of Book II or the laws governing the invalidity of contracts. In limited liability companies, non-compliance with statutory provisions relating to the majority applicable to decisions amending the articles of association is not subject to invalidity under Article L. 223-30 .

The law or statutory provisions may provide for the possibility of excluding a partner from the company for reasons determined by these texts . When a statutory clause makes exclusion subject to a collective decision of the partners, the partner concerned cannot be deprived of their right to participate in the meeting and vote on their exclusion. Therefore, the exclusion decision made without their participation in the vote is void , even if they were allowed to take part . When it is abusive, the decision must be annulled without the need to prove the harm suffered by the partner concerned . However, the effects of an extraordinary general meeting during which the exclusion of a partner was decided based on the statutes cannot be suspended as long as the partner attended and participated in the vote .

4) Appointment and report of the statutory auditor

Companies that exceed, at the close of the fiscal year, two of the following thresholds must appoint one or more statutory auditors: a total balance sheet of EUR 4,000,000, a net turnover of EUR 8,000,000, and a number of employees of fifty . The statutory auditors are appointed by the ordinary general meeting . According to Article L. 820-3-1 of the Commercial Code, the resolutions of companies taken in the absence of the regular appointment of statutory auditors or based on the report of statutory auditors appointed or remaining in office contrary to the provisions of the title relating to statutory auditors or other applicable provisions to companies, are null . This nullity is a mandatory public policy provision and applies without distinction, whether the appointment of the statutory auditor is voluntary or required by law or the statutes, and whether or not the resolution is included in their report on the annual accounts . In accordance with Article L. 823-1 of the Commercial Code, when a company required to appoint a statutory auditor appoints an individual or a single-member company, one or more substitute statutory auditors, called to replace the incumbents in case of refusal, impediment, resignation, or death, must be appointed under the same conditions. The functions of the substitute statutory auditor called upon end on the expiration date of the mandate entrusted to the incumbent, unless the impediment is only temporary. In the latter case, when the impediment has ceased, the incumbent resumes their functions after the approval of the accounts by the general meeting or the competent body. Consequently, a resolution must be annulled when, contrary to the provisions of Article L. 823-1 of the Commercial Code, the partners of an SARL have not appointed a substitute statutory auditor to replace the principal for the remaining duration of the latter's mandate . However, a resolution cannot be annulled on the basis of Article L. 820-3-1 of the Commercial Code solely because a substitute statutory auditor has not been appointed, as this text only requires the appointment of an incumbent . Furthermore, the provisions of Article L. 225-204, para. 2, of the Commercial Code, which provide for the preparation of a report by the statutory auditor on the causes and conditions of the capital reduction and its communication to shareholders prior to the general meeting, are not prescribed under penalty of nullity of the resolutions .

CA Versailles, 11 June 2024, LawLex202400004438JBJ.

Cass. com., 7 May 2019, LawLex202200008803JBJ.

Cass. com., 21 June 2023, LawLex202300008640JBJ, specifying that Article L. 820-3-1 of the Commercial Code, which requires the appointment of a statutory auditor under penalty of invalidity of the resolutions of ordinary general meetings, establishes a rule of invalidity that derogates, in the area it governs, from that established in Article L. 235-1 of this code.

Cass. com., 15 March 2017, LawLex202200005592JBJ.

Cass. com., 11 January 2017, LawLex202300004194JBJ.

CA Aix-en-Provence, 13 December 2012, LawLex202200009451JBJ.

Cass. com., 30 May 2012, LawLex202300003626JBJ. - Contra, CA Paris, 6 October 2010, LawLex202200008385JBJ, annulling a resolution adopted by a simple majority.

Commercial Code, Art. L. 221-16, regarding SNC; Art. L. 231-6, regarding companies with variable capital; Art. L. 227-17, regarding SAS.

Cass. com., 23 October 2007, LawLex202200009052JBJ, concerning an SAS, JCP E 2007, No 1280, obs. CAUSSAIN, DEBOISSY and WICKER; JCP G 2007, No 10197, obs. BUREAU; RTD com. 2007, 791, obs. LE CANNU and DONDERO; Rev. sociétés 2007, 814, obs. LE CANNU; D. 2008, 47, obs. PACLOT; JCP E 2007, No 2433, obs. VIANDIER; D. 2007, 2726, obs. LIENHARD; RTD com. 2008, 566, obs. CHAMPAUD and DANET; 9 July 2013, LawLex202200010138JBJ.

Cass. com., 6 May 2014, LawLex202200010139JBJ.

Cass. 1re civ., 3 February 2021, LawLex202300001669JBJ.

CA Aix-en-Provence, 12 September 2024, LawLex202400006429JBJ.

Company Law (en cours)

202. Strategic deliberations

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202. Strategic deliberations

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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